WASHINGTON. Mar 2: Bosnian Muslima and Croats agreed Tuesday on the framework for establishment of a federation that could move Bosnia a significant step closer to peace. "It shows that peace is possible." Secretary of State Warren Christopher said, reports AP.

Brokered by the United States, the agreement would bring together two Of the three parties in a bloody two-year ethnic conflict that has cost the lives of more than 200.000 people. Missing from the equation are the Bosnian Serbs who have military control over

for foreign affairs, national defense and commerce.

The president and vice president will be elected by a two-house legislature with the two ethnic groups alternating yearly in holding the two positions. Th^ government will be headed by a prime minister.

The cantons will have authority over police, education, culture, housing, public services and radio and television.

With Christopher looking on. the agreement was signed at the State Department by Prime Minister Haris Silajdzlc of Bosnia. Foreign Minister Mate Granic of Croatia and

calls for a confederation with Croatia that would Include open borders and strong economic ties.

A deadline of March 15 was set for drafting a constitution for the new state and for completing work on the Confederation with Croatia.

The administration hopes that creation of the entity would increase pressure on the Serbs to Join in a peace agreement that would finally end the fighting in the former Yugoslav republic.

"We hope and pray this is the first step toward peace." said Silaldzic.

more than half the former Yugoslav republic.

The agreement creates a federation of cantons made up of area where the majority of the population is either Muslim or Croat. They would have equal rights, with a centra] government responsible

Bosnian Croatian President Kresimlr Zubak.

Each of the signers paid tribute to the United States role In brokering the agreement.

In addition to the provisions for the bi-communal Bosnian state, the pact also

He also said he hoped that "American Involvement will continue."

Christopher said the United States and its allies would join in efforts to implement the agreement and also to rebuild war-ravaged Bosnia.

In another promising step.

Serb leader Radovan Karadzic announced in Moscow' an agreement to open the airfield at Tuzla in Bosnia. He said the first relief plane to the city would be Russian.

The Serbs are under threat of NATO air strikes if they refuse to allow opening of the airport by next Monday.

The agreement in Washington was reached after four days of intensive negotiations by Muslim and Croatian leaders.

Croatian Foreign Minister Mate Granic said earlier in the day the talks were in there final stages.

The -details were not immediately available.

At the White House. Clinton bade farewell to British Prime Minister John Major, and the two leaders said at a brief news conference that they planned to work together "for a resolution of the crisis" in Bosnia.

Granic and Bosnian Prime Minister Marls Silajdzlc, a Muslim, have been negotiating in Washington over the past three days.

Throughout the discussions in the US capital, Christopher and other administration officials steered clear of sounding overly optimistic.

Even as Granic was predicting an agreement, a , senior administration official cautioned that issues remained to be resolved.

Granic did not discuss the details of the possible'accord other than to say it would lead to a federation between the two parties who would then have close Ues with Croatia.

Late last week, the Clinton administration unveiled a proposal for uniting Bosnian Muslims and Croats into an enUty. The next step would be an attempt to link that federation with a Serbian entity and form a country comprising two republics.